Goach, you might remove the pto cover on the driver's side and drain the old stuff out of there and then try and get a popcicle stick and try and reach in and get all the sludge out first before washing. The later sm420s say 61 and newer have a round magnet instead of the chip collector at the bottom of the case.
Option B would be buy a complete rebuild kit around $115 disassemble the trans, clean the case properly, replace the 2 bearings on the main shaft, two on the counter shaft, thrust washer next to 2nd gear and synchros on 3rd and 4th if needed and clutch gear needle bearings. They are not that bad to work on but you need a press. You have to get everything removed to get to the Chip collector to remove and clean. I have found on two occasions the retaining ring for the second gear syncro laying in the chip collector all mangled and broken up in pieces.
Here is a guy with that problem and doesn't know it yet, but will find his retaining ring in the bottom of his transmission:


Last edited by sstock; 03/25/2019 2:57 PM.
1953 Chevrolet 3100
261 cu inch, sm420, 3.55 rear, torque tube still,omaha orange, still 6 volt, RPO green glass, side carrier spare, all done
In the DITY Gallery
Video of the 261 running

1964 GMC 1000
305 Big Block V6, sm420, the next cab off restoration